Written by Tony Marrone

Most of us have the great burden of having to finance our own higher education, and based on the rising cost of private graduate education, many law students are graduating with student loan debt reaching or exceeding the $200,000 mark.

The demanding course-load most law students endure makes it difficult (read: impossible) to go to school and work full-time. In order to help pay monthly expenses and survive with a decent standard of living during law school, I depend on my student loans refund at the beginning of each semester to help the fiancee and I survive.

The question is, how should you allocate the funds?

The Frugal Law Student’s Guide to Getting the Most From Student Loan Refunds

Step One: Budget your refund. You’re going to need to decide at the outset how much of your money you can allocate to expenses each month, and make sure your total expenses are less than your refund. I personally use You Need A Budget, I like the fact that it works on both Mac and PC (I use a MacBook, but the fiancee uses a Gateway and an HP). Whatever you decide to use, you won’t get far into the semester if you haven’t budgeted at the outset.

Step Two: Place the bulk of your money in a high-interest savings account. ING is running a promotion where you get $25 instantly placed into your account, when you open an account with an initial deposit of $250. (See link here). I use ING because I like their customer service. There are certainly plenty of other banks out there that offer higher interest rates.

Step Three: Take advantage of opportunities for free money from banks for opening accounts. The math is simple here: if ING is offering $25 for you to open an account by depositing $250, and Etrade is offering $25 for you to open an account by depositing $100, and you have well over $1,000 in your checking account “doing nothing”, go ahead and open an ING and Etrade account. Most of the promotions only require you to keep your cash in the bank for 30 days if you decide later to close the account.

Step Four: Only borrow what you need to live on. I’m not advocating you max-out your Grad Plus and Stafford loans so that you can invest your money in a 4% savings account. Based upon the time-value of money and the high-interest rates we pay on education loans, borrowing more than you need is a losing proposition. Even if you borrow excess money through your loans and invest aggressively and are successful, you’re really only talking about a nominal return, not even taking account the true value of the money you are borrowing (i.e., adjusting for inflation).

You need to plan ahead and be conservative when deciding how much money to borrow to finance your education costs. However, it is even more important to store the borrowed money wisely (not in canisters or buried inside your mattress) so that you can ease the pain that will later be brought on by high-interest rates during repayment.

Written by Brett McKay

If you’re not sure you can afford law school, look into part time programs. With part-time law school programs, you can continue to work full time and you go to law school at night. Because you’re still working full time, you have some financial advantage over students who are going full time.

You can contribute to retirement. Because you’ll still be earning an income, you can continue to contribute to your retirement account. While not contributing regularly for a few years may seem like not a big deal, the power of compound interest and the market may cause you to lose out on thousands of dollars in your retirement fund.

You still might have access to health insurance. It’s a sad fact, but most students don’t have access to affordable health insurance. When you or a member of your family gets sick or injured, medical bills can set you back financially. Hopefully, with your job you have access to health insurance.

You can take out fewer loans. You can offset the costs of your legal education by working. Instead of having to take out tens of thousands of dollars in loans for living expenses, you only need to borrow what you’ll need to pay for tuition. If you make lots of money, you might be able to get away without taking any loans out.

Flexible entrance requirements. If you didn’t do that well on the LSAT or have a dismal GPA, you might look into to part-time programs. Usually they’re much more lenient in admission standards. If you want to see if law school’s the right thing for you, with out making too much of a commitment in money and time, then a part-time program might be right for you.

What do you all think? Are there any other financial benefits of going to law school part time? Or do you think part time law school will actually hurt you financially? Later this week, I’ll be posting on the financial pitfalls of part time law school, so I’d love to have your input.

Written by Brett McKay

Here’s a list of 180 money saving tips that can turn your financial life around 180 degrees. These are things that I have learned while reading blogs or other books. I’ve tried to provide links to blog posts and other articles that elaborate more on the tip. This was a fun exercise. While I personally don’t practice every single tip listed, it was a good way to find out how I can do better on saving money.

Automobile/Transportation

Wash and vacuum your car at home.

Buy a used car. New cars drop significantly in value as soon as you drive off the lot.

Don’t buy prepackaged cheese or meat. Go to the deli and have them slice it for you. You can get more for you money.

Collect vegetable scraps in a bag in the freezer. As soon as it’s full, make a soup out of them.

Buy whole roasted chickens. When you have used all the meat, throw the bones into a soup.

Housing

House sit. Older affluent couples often leave their house for months at a time for vacations and need someone to watch it while they’re gone. Not only can you get free rent, you might get some extra cash.

Become live in help. Some older people need help around the house, someone to cook meals for them, or just someone to talk to. You can live rent free this way.

Household

Buy furniture at a consignment store.

If you need a tool, see if you can borrow it from someone before you go out and buy it.

Don’t throw away “dead” batteries. Remove them from your radio and use them in quartz clocks. These clocks take such a small amount of power that batteries too weak to run anything else may have enough power to run a clock for a while.

Wash and reuse plastic bags.

Clean your own carpets. You can rent carpet cleaning machines for about $10.

Health Care

If you take a prescription medication on a regular basis, ask your doctor to write a three month prescription. Instead of paying three co-pays, you only pay one.

Go to the dentist at your local dental school. Students need people to practice on. You can get all your dental needs fulfilled at a reduced cost.

If your doctor gives you a prescription, ask if he has samples that he could give you.

Travel

Plan trips where you have friends and family. You might be able to score free room and board.

Go camping.

Stay at a college dorm room when traveling. Many universities rent out dorm rooms at a decent price during the summer.

Book your flights and cruises way in advance. You can get lower prices.

Always negotiate hotel room prices. Hotel rooms are like highly perishable food: if they’re not used that day, they’re wasted. You can almost always get a better deal just by asking, but do it with a nice smile face-to-face when you check in, or with friendly calls direct to the hotels you’re considering. It won’t work if you just call national 800 numbers, because they can’t negotiate. If your flight is overbooked and the airline offers a voucher if you take a later flight, take it.

Avoid renting a car at the airport. You’ll find more competitive rates, plus avoid extra surcharges at car rental agencies away from the convenience of the airport.

Time your stay for best hotel deals. Plan the timing of your stay according to the type of place you visit. Hotels in cities are usually cheaper on the weekends, when business travelers aren’t staying there, but hotels in resort areas or other places that are popular with leisure travelers are often cheaper during the week

Tourist spots sell everything from film — to capture those special moments — to sunscreen, bottled water and aspirin for prolonging your fun, at a higher cost. Purchase these items before and save.

Travel after peak season.This might not be an option if you have school-age children. But families with infants and toddlers can take advantage of discounted rates by traveling in the fall.

Learn the art of the re-gift. If you get something that you don’t like, keep it and give it to someone else later. However be careful to keep track of who gave you what. You don’t want to give a gift back to somebody.

Can you think of any more? Add to the conversation!If you enjoyed this post, then make sure to subscribe to my RSS Feed.

Featured Resources

A great way to avoid spending extra Money is by avoiding Credit Card Offers that have a high Interest Rate. When you signup with a new Credit company be sure to check their APR rates and find out if a free Balance Transfer option can help you save money.
[tags]saving, frugality, personal finance, clothing, food, cars, beauty, health care [/tags]

Written by Brett McKay

Andrew Flusche is the creator of the excellent blog Legal Andrew. Andrew just recently graduated from the University of Virginia School of Law and is preparing for the bar exam. (Boo.) He will be working for the public service group, American Life League, doing something he’s passionate about. Andrew is one the most passionate bloggers I’ve met. He always produces quality posts on legal productivity and improving your blogging. He also has the coolest blog layout I’ve ever seen. Andrew was kind enough to answer some questions on what he is doing to mitigate his crippling law school debt.

1) How much law school debt have your racked up?

My total education debt amounts to a small mortgage. The grand total approaches $140,000. About 9% of that is undergrad; the rest is from law school. I believe that’s a bit above average, even for UVa Law. We encountered some medical expenses in the past three years (such as my spontaneous pneumothorax), so we received some extra loans to help with that.

2) What action or habit do you think saved you the most money while in law school?

Taking the bus to and from school. As you know, sharing one car with your spouse is a great way to save money. My wife and I have had only one car since we got married (right before law school). Our apartment is right on the city bus line. I take a city bus for 15 minutes, then switch to a university bus for another couple of minutes. Everyone affiliated with the university gets to ride all the buses for free. It’s a shame that more people don’t take advantage of it. If you’re looking for a place to live, really think about public transportation options. You just can’t ignore free transportation, especially with gas prices these days. Besides, you’ll help the environment a bit.

3) If you have student loan debt, when would you like to pay it off? How do you plan on reaching your goal?

I’d like to pay it off before I die. I say that laughingly, but the men in my family don’t live too long. A 30-year repayment plan might not reach my “before I die” goal. In reality, I’m extremely lucky. UVa Law has a great loan forgiveness program. Since I’m going to be in public service, the school will pay my law school loans for me. I’ll put my law school loans on a 10-year repayment plan. Assuming I stay in public service for 10 years, the school will keep on paying. I have to contribute some, if my salary is over $35,000. But it’s still a great deal. My undergrad loans will be on a 15-year plan, but I’d like to knock them out in 10 years as well.

4) What other personal financial goals have you set for yourself?

My biggest finance goal right now is to start saving. As soon as I start working full-time, we’re going to setup automatic savings debits, as well as contributions to a retirement account. They might start out at only $20 a month, but it will give us a start. I think that’s important; save regularly, even if it seems like chicken feed. Other than that, we want to buy a small starter home. This might be a year or two away, but it’s definitely a goal.

5) What is your weakness in regards to your personal finances and how do you think you can improve it?

Food. You’d be surprised how much two people could spend on food, between groceries, eating out, coffee, snacks, etc. A “good” month of food expenses for us is about $900. The main problem is dinner. If you can find the perfect way to have affordable, easy, tasty meals, you’d be a rich guy.

6) I know you’re big into GTD. How do you manage your finances? Do you have a system like GTD? Is there a particular software you use to keep track of your money?

I don’t know how closely my financial system resembles GTD. We track everything with Microsoft Money, so we can review spending habits and stay on top of bills. I try to follow the “2 minute rule,” by paying bills as soon as I open them. This keeps them from piling up or accidentally being paid late. Receipts get entered a couple times a week. Paychecks are on direct deposit, so they’re in the bank without effort.

7) What do you think is the biggest money mistake law students make?

This will sound hypocritical, but buying food at school is nuts. I’ve bought my share of soft drinks, but buying lunch there every day could easily amount to $30-40 per week. It’s much cheaper to bring a sandwich or some leftovers from dinner. Heck, even a Stouffer’s frozen dinner would save money.

Do you have any suggestions to other law students regarding their personal finances?

Cut back on unnecessary expenses. Do you really need to buy a new car with your summer associate earnings? Do you need the latest and greatest cell phone? Heck, do you need a cell phone at all? I’ve lived without one just fine. What about cable TV? Try Netflix or something instead. And look for casebooks on Amazon or ask to borrow them from a friend. That can save a couple hundred bucks a semester, if you’re lucky.

Thanks, Andrew for taking the time to answer these questions! Stop by Legal Andrew today and look around his site. You’re sure to find something useful and informative.

Written by Brett McKay

I first heard about Anya Kamenetz’s book, Generation Debt, during an interview with her on NPR. I was interested in her argument that Generation X and Generation Y have a good chance of being the first generation in America to be worse off then their preceding (Boomer) generation.

The main argument of Generation Debt is that because of higher education costs and lowering wages, young people face the prospect of not achieving a middle class life style. Kamenetz mixes statistics with anecdotal stories that show the disparaging circumstances young people. Many of the stories were heartbreaking and they all had the same theme: Boy or girl has dream of going to college and starting a career. Dream crushed by rising costs of college and stagnating wages.

What I liked about Generation Debt
I though Kamenetz made a strong argument for financial aid reform. The recent Sallie Mae scandals made her book even more relevant. If America wants to be competitive in the future, the government is going to have to invest much more in education than what it is investing now.

I also agreed Kamenetz that young people need to adjust their expectations. Everybody doesn’t have to go to college to be a success. For many young people it can be waste of time and money. Many of the people she interviewed in her book took on thousands of dollars in student loans in order to go to school. However, the only reason they were going was because that’s what every young person is supposed to do. By the time they realize college isn’t from them, they’ve accumulated $10,000 in student loans. Instead of just encouraging college, parents and counselors should also encourage vo-tech. I don’t know why vo-tech is so stigmatized. I know plenty of people who have gone to v0-tech, learned a trade, and are making a decent living. Both college and trade schools should be seen as equally viable steps to earning a living.

My Beefs With Generation Debt
I guess it’s the classical liberal in me, but I felt Kamenetz put too much blame on society/corporations/government for young people’s debt problems and not enough on the individual. For example, she argues because young people are the most advertised to demographic, young people are taking on more debt to buy stuff. I just don’t buy this argument. It’s called personal responsibility. I find it rather insulting to our generation that we’re dumb enough to buy stuff just because an advertiser says we need to.

Additionally, she makes the case against credit card companies preying on college students by giving out t-shirts and beer coozies. Yes, credit card companies market heavily to college students, but they’re not holding a gun to their head sign up. If you’re dumb enough to trade t-shirt for access to high interest rate debt, then you deserve to pay the bill. Perhaps it’s a fault, but I have no sympathy for young people with credit card debt, especially when the debt is for eating out, CD’s, travel, ect.

I also wish Kamenetz had more examples of young people making responsible financial decisions. Most of the book is filled with bad examples of young people spending money on iPods and vacations they can’t afford. It wasn’t until the end that she discussed young people who are living frugally and saving for the future. The discussion, however, was only a few pages.

Do I Recommend it?
Overall the book was… eh… Kamentz makes some good arguments about the rising costs of college education and the need for the government to invest more in education. However, I was turned off by her slightly whining tone. She made the young people sound like victims of forces they can’t control. However, many of the cases appeared just to be victims of bad personal decisions. I don’t think I would recommend someone to read the whole book. Rather, I would just direct their attention to the chapter discussing the situation of education costs.

Written by Brett McKay

Like most young students, I’m poor. My wife and I are always looking for ways to save money so we can mitigate our already high student debt load. Here’s a list of the 5 things that I have found that have helped us save the most money.

Live with your parents. Right now, my wife and I are living with her parents. This has been our biggest money saver. It’s worked out rather well for us and my in-laws. We have rent free housing and they get in home service. My wife cleans the house and makes dinner for them every once in awhile and I take care of landscaping and the recyclables.

Bring your lunch to campus. I’m surprised by the number of law students who go out to eat every day. If the average meal is $5, that means that many students are dropping $100 a month just on lunch. My average home brought lunch costs probably a $1, some time less.

Buy used textbooks. Buying new is for suckers. Buying used law school text books can be tricky though because publishers come out with new editions frequently. It’s OK to not buy the newest edition. The reality it that there’s not much difference between the older and new editions. If there is something new, just read it in a friend’s text book.

Take advantage of free food at club meetings. There’s always a club meeting somewhere on campus on any day of the week. Often at these meetings there’s free food. Stop by, enjoy the speaker, and load up on grub. In addition to bring your own lunch, this is another great way to reduce your food budget.

Featured Resources

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[tags]ProBlogger, Top 5, saving, money, school[/tags]

About The Frugal Law Student

The Frugal Law Student is for anyone trying to mitigate their crippling debt. Me? I'm trying to mitigate the tens of thousands of dollars I've taken on in student loans. Join me on my quest to avoid taking on more debt, paying off some of the debt I have, and trying to survive law school while doing it. Read more about The Frugal Law Student, check out some of the best articles, or become a subscriber via RSS feed or via email